Revocation of brokerage agreements?

Is a brokerage agreement concluded by e-mail or telephone a distance contract, with the consequence that brokerage customers can revoke such an agreement within the statutory time limits? This was a question the Federal Court of Justice (BGH) recently had to decide.

A real estate agent advertised a residential property on an internet portal in which a consumer was interested. The consumer therefore contacted the agent by e-mail and enquired about the property, whereupon the agent sent him an exposé, which set out a brokerage commission of 6.25% of the purchase price to be paid by the buyer. No revocation notice was sent to the consumer and was also not available on the agent's website.

The consumer confirmed by telephone receipt of the e-mail with the exposé and agreed on a viewing appointment. Several weeks after the viewing, the customer purchased the property, whereupon the real estate agent invoiced the consumer for a brokerage commission. The consumer did not pay this, so the agent sued for payment of the commission.

The consumer defended himself with the argument that the brokerage agreement concluded by way of distance selling could be revoked, which he also did in the first instance.

The Regional Court (LG) and the Higher Regional Court (OLG) nevertheless granted the claim for payment.

Court decision

The Federal Court of Justice (BGH) ruled on 07.07.2016, Az. I ZR 30/15 (Press release) and reversed the appellate judgment and dismissed the claim for payment of the commission under the brokerage agreement.

A consumer would be entitled to a right of revocation in distance contracts. Distance contracts are contracts for the supply of goods or the provision of services, including financial services, concluded between a trader and a consumer using exclusively distance communication means, except where the conclusion of the contract does not take place within the framework of a distance selling or service provision system organized for distance selling. This was the case here because the conclusion of the contract took place exclusively by e-mail and telephone.

The consumer was also able to revoke the brokerage agreement in the first instance proceedings because he had not been informed of his right of revocation.

The consumer's right of revocation had not yet expired at the time of the revocation declarations. An expiry of the right of revocation presupposes that in the case of a service, the contract has been fully performed by both parties at the express request of the consumer before the consumer has exercised his right of revocation. These conditions were not met in this case because the consumer had not paid the commission before exercising the right of revocation.

Moreover, the real estate agent could not claim compensation in value because such a claim would have required an appropriate notice. Furthermore, the consumer would have had to expressly agree that the agent would begin performance of the service before the end of the revocation period.

Conclusion

Caution when concluding brokerage agreements via the internet, by e-mail or by telephone. Such agreements are generally distance contracts with corresponding information obligations and a right of revocation for the brokerage customer.